Open Source ERP Gaining Traction

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Habit is a powerful thing that keeps us following routines long after we know they probably aren't really working for us. That's certainly true of the way many companies buy, install and use enterprise software. (See the old cliche "Nobody ever got fired for buying IBM.") Yet there seems to be a growing desire for alternatives to the complex and costly stuff in place at many companies.


An increasing number of companies are evaluating open source software and/or software-as-a-service.These options look especially appealing for software that in the "business as usual" mode often involves lengthy and expensive implementations. Business intelligence fits that category, as I wrote earlier this month, citing my interviews with David White, a senior research analyst for The Aberdeen Group, and Mark Madsen, founder and president of BI research and consulting company Third Nature.


Vendors offer robust BI suites, yet many companies would happily settle for less functionality if the software was less expensive and simpler to deploy and use.


Like BI, ERP (enterprise resource planning) software has earned a reputation for tricky implementations, user pushback and shaky ROI. So it's no surprise that open source ERP appears to be gaining some traction.


According to a CIO.com story, open source ERP suites xTuple and ADempiere last week were listed as the two "most active" projects on SourceForge, a popular open source code repository with more than 2 million registered users. (Not all are active, of course.) Two other open source ERP projects, WebERP and OpenBravo, also made the top 20.


There have been nearly 400,000 downloads of xTuple software, says xTuple CEO Ned Lilly, who estimates xTuple has some 500 active participants in its open source community. The company has 200 paying customers. (As with other open source software, xTuple's ERP software is free, but companies can choose to pay for enhanced support or other services. The company's website offers a refreshingly direct price breakdown.) While he admits it's hard to determine exact numbers, Lilly believes there are between 7,000 and 10,000 xTuple installations in production.


Beyond simple cost comparisons, there are other advantages to open source. Ray Wang, a partner with the Altimeter Group, says in the CIO.com article that active open source communities can respond to support questions quicker than many vendors, a point also made by Aberdeen Group's White in our interview.


White told me he found vendors took 28 hours, on average, to resolve support requests while community forums did so in 25 hours. Of course, a growing number of traditional software companies like Microsoft and SAP are hosting active developer communities of their own.


Frank Scavo, managing partner of IT consulting firm Strativa and another source cited in the article, says systems integrators often like open source software because it's generally more cost effective to create customized solutions for customers.